Thailand’s insurance sector looks set to shake off any lingering concerns following the recent period of political instability. A number of insurers recently reported strong growth in premiums and earnings for the first six months of 2010, a trend that is expected to continue into 2011.
Speaking at a conference on the Thai life insurance sector, Sara Lamsam, chairman of the Federation of Thai Insurance Organisations, said that insurers had shrugged off the effects of riots that struck Bangkok in May.
“The industry was barely affected by the political violence, growing robustly in the first half of the year by 15%. We expect the industry will manage to surpass 18% growth by year-end, as the second half is normally the peak season.”
he told the conference.
These projections are in line with recent results posted by individual companies. On August 20, Bangkok Insurance (BKI) announced that it had achieved a 15-year high in net earnings for the first six months of the year. Earnings amounted to $27.6m, an increase of almost 80% compared to this same period in 2009. BKI also reported that written premiums rose by 18.5% to $160m, with net underwriting profit up by 64.4% to $15m.
According to Panus Thiravanitkul, BKI’s president, the outlook is as good or better for the remainder of the year.
“Our target growth of 13% is well achievable, as the global and Thai economies are recovering, exports are growing, banks are lending more, car sales are improving and the government’s stimulus spending is under way,”
Panus told local media.
Another policy writer, MSIG Insurance (MSIG), announced on August 18 that its earned profits amounted to $2.2m during the first seven months of 2010. The company also reported that it expects earned premiums to increase this year by at least 17% to $80bn. MSIG said in a statement that its strong performance was in part due to the recovery of the economy and a more selective approach to the underwriting of car insurance.
One factor that could slow Thailand’s economic recovery, and have a direct impact on the country’s insurance sector, would be a re-igniting of the political tensions that flared during the first half of the year.
Parts of downtown Bangkok were heavily damaged, resulting in substantial claims filed with insurance firms. This in turn is likely to affect the bottom line of a number of leading policy writers. However, the strong overall growth predicted for the sector means that the exposed insurers should be able to cover any losses.
In a statement issued in late May, BKI said it expected to incur losses of around $250,000 as a result of the political unrest, a figure the company said would not affect its financial status or operations.
Oxford Business Group (OBG) is a global publishing and consultancy company which produces original economic and business intelligence on markets in the Middle East, Africa, Asia, Eastern Europe and the Caribbean. Through its print and online publications, OBG offers comprehensive analysis of macroeconomic and sectoral developments.
Bangkok Insurance Public Company Limited is a Thailand-based company engaged in the provision of non-life insurance. The Company’s services include travel, motor, personal accident (PA), health, residential and commercial property, personal property, third party liability, business all risks, industry all risks (IAR), marine and cargo and miscellaneous insurance services.
Fire insurance covers loss of or damages to insured residential properties, such as detached houses, semi-detached houses and townhouses. It also covers furniture, decorative items and electronic appliances against damage caused by fire, lightning and explosion. Marine insurance covers cargo and hull insurances. Motor insurance includes compulsory and voluntary insurances. As of December 31, 2009, the Company had two associate companies, namely Asia Insurance (Cambodia) Plc and Asian Insurance International (Holding) Limited.
Note: This article was published on behalf of Oxford Business Group, the views and opinions expressed in this article are those of the authors and do not necessarily state or reflect the views of Thailand Business News
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Oxford Business Group (OBG) is a global publishing and consultancy company which produces original economic and business intelligence on markets in the Middle East, Africa, Asia, Eastern Europe and the Caribbean.